And Now . . . to East Coast for a Look at The Second Circuit’s Approach to the DMCA

Yeah, I know Viacom v. YouTube has been covered before. So go do something else if you’re already hip to all that case had to say. Go on . . . get back to the work you should be doing.

Well, despite the fact that the ruling came out last year, I recently had the opportunity to look at it again in preparation for case I’ll be defending out in New York. Why do these cases always come on the cusp of winter? Just to help me appreciate how nice it is here in California, I suppose.

In any event, my recent review of the Viacom case provides me with this opportunity to write a follow-up to my earlier post re the Digital Millennium Copyright Act’s (DMCA) “safe harbor” provision. So sit back and waste a little more time.

As we’ve discussed, that provision provides immunity to “any entity offering the transmission, routing, or providing of connections for digital online communications, between or among points specified by a user, of material of the user’s choosing, without modification to the content of the material as sent or received” provided certain dictates are followed. 17 U.S.C. § 512(a); see also UMG Recordings, Inc. v. Shelter Capital Partners 667 F.3d 1022 (9th Cir. 2013).

As you’ll recall, UMG Recordings provided the Ninth Circuit with multiple opportunities to reaffirm its long-held position that the “safe harbor” provision is to be applied broadly and liberally. In that case, the Court stated, among other things, that:

• Section 512(c)(1)(A)’s requirement that the service provider have neither “actual knowledge” of the infringing material nor a general awareness of “facts or circumstances from which infringing activity is apparent;” the mere hosting of copyrightable content with the general knowledge that the service could be used to share infringing material will not suffice to meet the actual knowledge requirement under § 512(c)(1)(A)(i); and

• Even with respect to a “red flag” awareness under Section 512(c)(1)(A)(ii), service providers are not responsible for investigating whether material is infringing; the burden of demonstrating infringement rests with the copyright holder, and no assumption to the contrary will be implied.

The UMG Recordings holding was issued at about the same time as the Second Circuit issued its ruling on the same topic in Viacom International, Inc. v. YouTube, Inc., 676 F.3d 19 (2d Cir. 2012) – and indeed it was the Viacom case that caused the Ninth Circuit to revisit its prior ruling.

In Viacom, the Second Circuit issued a ruling that addressed that portion of Section 512(c) that provides a service provider is not liable where it (1) does not have “actual knowledge” of infringing material; and (2) is unaware of “facts or circumstances from which infringing activity is apparent.” 17 U.S.C. § 512(c)(1)(A). As to the latter, the Court held that willful blindness is sometimes equivalent to such knowledge ( 676 F.3d 19, 34-35), and that § 512(c)(1)(B) places a service provider outside the safe harbor if it has “substantial influence” over the user activities from which it benefits. Id. at 38.

Viacom involved a dispute that arose out of YouTube’s hosting of material, much of which infringes third-party copyrights, some of which are held by Viacom and other major studios and networks. Viacom alleged, among other things, that YouTube made a practice of being willfully blind to such infringement, and that such willful blindness deprived YouTube of any safe protection it might otherwise be entitled to under § 512(c). The lower court disagreed, but the Court of Appeals issued a more narrow ruling. Specifically, it took aim at the § 512(c) safe harbor provision absolves service providers of direct or secondary liability for infringement “by reason of the storage at the direction of a user of material” conditioned on the provider not having “actual knowledge” of infringing material or “aware[ness] of facts or circumstances from which infringing activity is apparent,” thus compelling the service provider to “act[] expeditiously to remove . . . the material.” § 512(c)(1)(A). Significantly, the “aware of” provision is also known as the “red flag” provision. Viacom, 676 F.3d at 31.

The Viacom court held that, with respect § 512(c)(1)(A)’s provision regarding knowledge or awareness of specific acts of infringement, while evidence that YouTube knew of the prevalence of infringement was insufficient to invoke the “red flag” rule, YouTube’s internal emails discussing specific infringing clips might well have created a genuine issue of material fact. Viacom, 676 F.3d at 33–34. With respect these emails, however, the Court said that willful blindness may constitute actual knowledge under § 512(c)(1)(A). Id. at 34.

The court defined “willful blindness” as occurring where one “was aware of a high probability of the fact in dispute and consciously avoided confirming that fact.” Id. at 35 (quoting United States v. Aina-Marshall, 336 F.3d 167, 170 (2d Cir. 2003)). It rejected YouTube’s argument that the no-monitoring provision of Section 512(m)(1) nullified the well-recognized common law principle of willful blindness, stating that nothing in the DMCA specifically spoke to that doctrine. Id. at 34-35. It found that §512(m)(1) merely required judges to avoid imposing a monitoring requirement when applying the willful blindness doctrine. Id. at 35. Thus, while it appears that the no-monitoring rule limits in some way the application of willful blindness in the Second Circuit, the Viacom court failed to state precisely how it does so.

Nonetheless, it did provide some guidelines regarding willful blindness in general: consistent with how other courts have applied this doctrine to other federal statutes the Court suggested that an application of this doctrine will follow the well-established two-part analysis: (1) did the defendant have a subjective belief as to a high probability that a specific fact existed; and (2) did the defendant take deliberate actions to avoid learning of that fact. See Viacom, 676 F.3d at 35; see also Global-Tech Appliances, Inc. v. SEB S.A., 131 S. Ct. 2060, 2070 (2011); In re Aimster Copyright Litig., 334 F.3d 643, 650 (7th Cir. 2003). Obviously, this is a fact-specific analysis , but at the very least the Court appears to have recognized that § 512(m)(1) does not depend on “monitoring its service or affirmatively seeking facts indicating infringing activity.”

Also significant from the Viacom case: the Court commented on the meaning of the phrase “right and ability to control” from Section 512(c)(1)(B). In reversing the district court’s holding, it held that “requires something more” than ability to block content but something less than absolute knowledge of specific acts, such as “exerting substantial influence on the activities of users.” 676 F.3d at 38 (citing Capitol Records, Inc. v. MP3tunes, LLC, 821 F. Supp. 2d 627, 645 (S.D.N.Y. 2011); c.f. UMG Recordings, Inc. v. Shelter Capital Partners LLC, supra. But it also said that, for safe harbor protections, where the service provider does have “the right and ability to control” the infringing activity, it must not “receive a financial benefit directly attributable” to the activity. Thus, contrary to the Ninth Circuit’s dismissal of the UMG case, it is significant that in Viacom, the Court held that the right and ability to control the infringing activity need not require knowledge of specific infringements.

Jonathan Pink is a business lawyer with a specialty in copyright, patent and trademark litigation. His clients include many of the biggest names in the automotive and motorcycle aftermarket parts industries, and one of world's largest media companies. He has extensive experience in a wide range of intellectual property and commercial disputes including breach of contract, fraud, and the misappropriation of trade secrets. He can be reached at 949.223.7173, or at jonathan.pink@bryancave.com, and his full profile can be viewed at www.bryancave.com.